Trickle Down Effect: Cruel Joke or Inevitable Truth
There is no doubt in my mind that economic reforms have accelerated India's progress and absolute poverty as I have witnessed in my childhood seems to be absent and is at least not visible on the streets and bustees of urban and rural India.
The socialist model where all are forcibly labelled as equals and wealth is forcibly redistributed seems logical but has failed miserably. The main reason I guess is that when creators of wealth are forcibly made to give up most of their earnings to the state for redistribution to the poor and jobless, they lose their drive to create wealth. On the flip side if the jobless are given doles which are enough to live in decent comfort without work they will be happy to live a life of mediocrity without striving to improve their condition.
Markets by their nature, especially free markets dealing with private goods, inevitably lead to an equilibrium of supply and demand and this leads to a fair price and the usual double thank you moments where producer, consumer and distributor are all happy. This state of affairs needs minimal governance and no price controls. The increased demand leads to increased number of jobs for the poor and the availability of work leads to increased buying power and a greater degree of prosperity. This is a never ending virtuous cycle. However, for this to happen there needs to be an overarching state which provides a free democratic society with rule of law and peaceful co-existence of one all irrespective of caste, class, colour, gender or community. The Government must use its revenues to defend the country against external aggression, conduct foreign policy initiatives which will promote world peace and ensure that trade is conducted in a manner which does not compromise the country's interest.
So when this happens which is nearly utopian, the wealth of a nation rises and those at the bottom of the pyramid also benefit by what is called the "Trickle down effect". I have a fundamental objection to the term trickle down especially in the context of the poor. When the poor live literally desperately as though their house is on fire to try and put out the fire with a trickle makes no sense. The urgency of their requirement requires more money and quick money especially in the states of distress the poor often find themselves. Because private education and healthcare is available for a cost the aspirations of the poor lead them to penury. So either they suffer or die and in all natural calamities the poor quickly overcome their grief to get on the cynical business of getting the financial help (compensation). The compliance proof hard to procure comes to become a priority so this trickle which no doubt is a cruel joke in good times becomes even worse when this happens.
In the case of this theory the chances that the state makes policies which favour the rich in the name of promoting industry and the corporates who fund their political campaigns. All countries pursuing liberal economic policies have seen a very significant number. In India before 1991 there was only one billionaire today there are nearly 300 and rising and in the last three there were more than 120 such individuals. It is already true that the top rich 1% own 40% of the total wealth and the bottom 50% have only 6% of the total wealth of the country. So the trickle at the bottom is literally a trickle.
The paradox is that the socialist state which promised immediate relief to the poor perpetuated poverty and failed due to corruption, complacency and the absence of freedom killed creativity and initiative and promoted mediocrity. A toxic sense of entitlement meant laziness, indolence and inertia. But the reforms 1991, unleashed powers of free enterprise and millions come out of poverty faster than ever before. Yes because of a massive increase in money supply and higher incomes of the rich their ability to simply increase the wages of the poor has experienced and the left overs in terms the increased supply of luxury items has also helped the poor having things they rarely possessed in the past. For example the past students school college and event uniforms and T shirts are worn all cleaners, sweepers, car washers, newspaper boys, rag pickers, gardeners etc. Cheap food on the streets of Mumbai and in the soup kitchen like social organizations, Mid day School meals, ISKON food distribution all seem to help yet the trickle remains a trickle not even a small stream.
We have a leadership crisis and any talks of giving freebies, waiving loans or free water, electricity etc is dismissed as irresponsible spending. However, letting big industrialists declare bankruptcy and leave the country with unpaid loans, letting public sector companies lose money by favouring private sector is scarcely noticed. Huge contracts given to crony capitalists and acquiring land from the poor by force and for a pittance are not talked about at any stage.
The time has come to call the bluff. While the culture of politicians securing votes by doling gifts to poor is prevalent in India, I believe that there will be space for genuine caring political leadership which keeps the poor in their framework when creating policy.
Gandhi's Talisman is a simple test to guide one's actions when in doubt or when selfishness clouds judgment: recall the poorest and weakest person you've encountered and ask if your contemplated action will benefit them and restore their control over their own life and destiny, leading them to swaraj (self-rule). If the answer is yes, it indicates the path to take; otherwise, it suggests refraining from the action.
Vispi H. Jokhi
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